Do You need to Convert Currency to Trade? (How to Hedge Currency Risk)

This video answers a very common question related to converting currency when trading stocks using Interactive Brokers. This video goes over two methods of how to hedge currency risk when the investor needs to convert their home currency to a foreign currency.

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The content that this channel provides is intended for educational purposes only. Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. The risk of loss in trading commodity interests can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition.

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00:00 Info & Contents
1:26 First Example (Margin account collateral)
2:46 Playlists and Disclaimers
3:45 Example of not converting currency with buying stock
4:18 Interest and Margin Rates
4:46 Why this is an issue for investors
5:42 What is Currency risk?
6:46 Method 1: Separate Account to put on a Currency Hedge
9:10 What This Results in?
10:14 Interest Paid and Earned
11:23 Why I prefer Method 2
12:12 Method 2: Using CME Futures to Hedge
13:43 EURGBP Futures Value and Capital Requirement
14:30 Viewing EUR.GPB Futures in IBKR TWS
15:01 Creating the Hedge
16:35 Imperfect Hedge Problem
17:02 Rolling the Futures Position
17:32 How the Roll would look in IBKR TWS
19:15 How to achieve a Precise Hedge